Document fraud or document forgery has become a large source of criminal activities, costing the global economy billions of dollars every year. Documents are faked for countless reasons: to get a loan they wouldn’t otherwise be allowed to, to purchase a property, to sell a property, to buy a loan, to flee arrest, to stay in a country illegally, etc.
Even a few years ago, the number of identity frauds was less mainly because the customer onboarding usually happened in a physical location, mostly in the branches of the financial institutions. Now that almost all the industries support online onboarding of new customers, it has become easier for fraudsters to fake the documents to get through the door easily.
Prevent Frauds At The Root: Steps to Identify Fake Documents
The percentage of document fraud is more common in financial institutions like banks and NBFCs since they provide almost all core features like new customer onboarding, issuing loans, buying and selling financial products online, making it easier for the fraudsters to forge the documents. To counter the document fraud, financial institutions are now forced to invest in smarter technologies during the KYC and onboarding stages.
Below are important tips to detect and prevent document fraud.
1. Use Microscopic Scanners for texture analysis
Using microscopic scanners for texture and data inconsistency analysis will help in identifying forged documents and black stolen documents.
a. Forged Documents
Forging documents includes making changes to existing documents. The changes may be simple like changing the date of birth or expiry date, etc, or complex like changing the total address of the holder including the country, including false watermarks, inserting real pages from another original document, etc. Fraudsters use special scrubbers to erase the information and include new information.
In the case of property documents or agreements, the fraudsters easily include new information or remove critical information. Including new information is typically done at the end of the document where there is any unused space. Typically, the new information would be like including new clauses favouring the document holder. Deleting the information is done using a special whitener and can be done at any part of the document.
Using an advanced microscopic scanner to do data integrity analysis will help in detecting the texture and density of the fonts throughout the document. If the texture and density of the ink used are inconsistent, it is evident that the document has been tampered with.
b. Blank Stolen Documents
All original documents start blank before they are personalised. Fraudsters attach the supply chain of the document, procure the blank documents and fill in false information. These kinds of fraud involve heavy coordination among the fraudster network and are very difficult to identify at the first sight. However, fraudsters cannot replicate every single piece of information including specific security marks, watermarks, stamps that are unique to every document. Using such a technique fraudsters can even prepare a bank statement.
Advanced microscopic scanners can be used for any text inconsistency. As soon as any inconsistency is spotted, the document can be investigated further for any data inconsistencies like the placement of specific text like date of birth, date of expiry, date of origin, etc in the document.
2. Use Advanced Visual Authentication techniques
Advanced visual authentication techniques to scan specific security features, stamps, watermarks will help in identifying counterfeit documents, compromised or sample documents, and camouflaged documents.
a. Counterfeiting Original Identity
While modified documents are false original, illegitimate documents may be false creations. Counterfeiting identity is one of the most common document frauds. In this, the fraudsters use a template of the original document and fill the details as they need, making the final document resemble almost original. To the naked eye, the documents look original. Though on further investigation, most of these fake documents lack the security features unique to those ID documents.
Usually counterfeiting original identity is done during the KYC stage of the customer onboarding. So, instead of rushing up the onboarding, if the onboarding software has a provision for scanning all the documents for specific security features, it will be easily revealed that these documents are fake.
b. Compromised or Sample Documents Misused
These are a lot of government-issued identities and other legal documents that are available as samples in public spaces like the internet, presentations, etc. Fraudsters steal these documents and insert specific information to make them look like the original.
Looking for specific security information using visual document authenticity techniques can help identify font anomalies, digital tamperings like modified ID photos or tampered pixels, etc.
c. Camouflage Documents or Fantasy document
If you see any unknown places like Utopia, misspelt places like Griece, etc. in a document, it is clear that the document is camouflaged. Fraudsters use such tricky words which are very close to the original to tag false issuing authorities in the document. It is very easy to slip these obvious fake entries.
Using advanced visual document authentication techniques and comparing with an authorised list of countries, states, issuing authorities, etc. will help in identifying these frauds.
3. Live Identity Verification
Live identity verification techniques like selfie photos or live video chat will help in preventing frauds committed using fraudulently obtained documents and imposter documents.
a. Fraudulently Obtained Document
This is a tricky category of fraud in which the fraudsters use somebody else’s stolen photo and use it in their original document. The only way to verify this kind of fraud is to use proof of ownership techniques like making the document holder take a live photo in the verification device and then compare it with the photo in the document.
b. Imposter Document
This category of fraud is exactly as it sounds like. A fraudster steals somebody else’s identity document and uses it as it is. If the KYC process is not strong, the imposters can easily get through the gates without any difficulty. The best way to prevent these kinds of frauds is to make the document holder get into a live video chat and let the document collector take a photo of the application and verify against the image in the application form.
Finezza’s suite of lending and onboarding solutions combined with a bank statement analyser can help your institution identify fraud or fake documents and take the right proactive measures. The document identification framework provided by Finezza can enable you to validate documents like Aadhar cards, bank statements, GST returns, cheques, photos, balance sheet, etc. and tag all data points. Besides, it also facilitates automated extraction of data without the need for any manual intervention to speed up the entire process.
Don’t let ID and document fraud prevent you from delivering a faster turnaround and a streamlined onboarding experience. Learn more by contacting us at Finezza about how you can prevent the submission of fake documents and validate your loan applicant’s lending profile.